Army turns to private companies to run its hotels

May. 1, 2013 - 07:55AM
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The Army wants its soldiers and their guests to be all they can be in nicer hotels on bases across the country.

On Wednesday, InterContinental Hotels Group will announce plans to take over hotels on 18 military bases in the next eight years, bringing the number of properties in its IHG Army Hotels program to 76 on 39 bases. The renovated or new hotels will replace Army-run lodging that a 2003 internal study deemed in desperate need of renovation.

The Army has been letting private companies take over guest lodging at bases in the U.S. and its territories as part of a $1 billion privatization program that launched in 2009. Lend Lease, a property developer and builder based in Australia, is financing the project and building the hotels. IHG will operate them.

Guest lodging is used by troops back from overseas duty or between assignments, trainees, government workers and visiting family members. By turning the quarters into IHG-branded hotels, guests will have amenities such as fitness centers, Wi-Fi, weekly social hours and free shuttle service. They can also earn points toward future stays at off-base properties through IHG’s loyalty program, something they weren’t able to do in the past.

They’ll also typically be paying below-market rates: The properties are required to keep rates at 75 percent of the government’s per-diem housing allowance.

Installations that will get the newest hotels include Fort Bragg, N.C.; Aberdeen Proving Ground, Md.; Fort Meade, Md.; the U.S. Military Academy at West Point, N.Y.; and Fort Stewart, Ga.

The 2003 study found that more than 80 percent of the existing lodging needed to be upgraded at an estimated cost to the government of more than $1.2 billion.

Chekitan Dev, associate professor of marketing and branding at Cornell University’s School of Hotel Administration, says running hotels on bases was never the Army’s “core competence.”

Privatizing the hotels “brings in a partner that is qualified to manage hotels efficiently and effectively,” he says.

Buildings that can be salvaged are being converted into Holiday Inn Express properties, Smith says. Those that are in too much disrepair are being torn down and turned into extended-stay Candlewood Suites and Staybridge Suites, which have full kitchens and common areas.

Sgt. 1st Class Jeremiah Peters, who served in Iraq and Afghanistan, stayed at an IHG Army Hotel in Fort Bragg for a couple of weeks in March while he and his wife searched for a house.

Because of previous stays, he already has become a Gold member in the loyalty club program.

He had stayed at on-base hotels before IHG took over and prefers the new arrangement.

“Anything I needed, they took care of me,” he says. “They greeted you with a smile. I would say it’s a completely, totally, 180-degree difference.”